3 tips for surviving difficult conversations.

No one is immune to workplace tensions: It is inevitable that you will have some trying conversations with colleagues or clients. Here are three ways to reach a productive outcome, no matter how tough things get:

1. Keep it civil.

Don’t turn the conversation into a combat with a winner and a loser. Everyone looks bad when the discussion turns toxic.

2. Don’t rehearse.

When you know things are going to be tough, it’s tempting to practice what you’re going to say ahead of time. But this is a conversation — not a performance. Instead, know where you stand but be open enough to listen and react.

3. Resist making assumptions.

You don’t have access to anyone’s intentions but your own. Don’t assume that you know where your counterpart is coming from or how she views the problem. Instead, ask for her perspective.

Adapted from “Difficult Conversations: Nine Common Mistakes” by Holly Weeks

3 ways to avoid communication breakdowns.

Even though communication is the lifeblood of an organization, it’s difficult to find a company that doesn’t have its momentary breakdowns in that area. Part of a manager’s job is to keep these to a minimum. Here are three ways to ensure employees understand and communicate well:

1. Provide context.

For people to understand a message, they have to know why it’s important. Give people enough information so they know where things fall on the priority list.

2. Encourage questions.

Don’t just ask if people have questions, encourage them to raise concerns. This type of interaction helps people absorb information and understand messages so they can pass them on.

3. Stay connected.

People respond to communications very differently, even when they’re hearing the same information. By being in tune with your employees, you can anticipate their reactions and better understand how to deliver messages.

Adapted from “Your Communications May Not Be Communicating” by Ron Ashkenas

Dale Carnegie’s human-relations principles.

• Look at things from the other person’s perspective.
• Offer genuine appreciation and praise.
• Harness the mighty power of enthusiasm.
• Respect the dignity of others.
• Don’t be overly critical.
• Give people a good reputation to live up to.
• Keep a sense of fun and balance in your life.

Stuart R. Levine and Michael A. Crom, The Leader In You.

Learning not to worry.

• Live in day-tight compartments.
• Take comfort from the law of averages.
• Cooperate with the inevitable.
• Put a stop-loss order on your worries.
• Keep things in perspective.
• Finally, get busy.

What is there is good reason to worry?

1. Ask yourself, What’s the worst that can possibly happen?
2. Prepare yourself mentally to accept the worst, if necessary.
3. Then work calmly and methodically to improve upon the worst.

Stuart R. Levine and Michael A. Crom, The Leader In You.

How to build a successful team.

• Create a shared sense of purpose.
• Make the goals team goals.
• Treat people like the individuals they are.
• Make each member responsible for the team product.
• Share the glory, accept the blame.
• Take every opportunity to build confidence on the team.
• Be involved, stay involved.
• Be a mentor.

Stuart R. Levine and Michael A. Crom, The Leader In You.

Nonprofit legal self-assessment checklist.

A guide for helping nonprofits to understand common legal obligations and to highlight areas where greater inquiry should be made.

You sit on the board, or are an executive director of a Washington nonprofit corporation. You love your organization and are passionate about its mission. You are proud of the service your organization provides to the community and to those in need. You commit many hours to assuring the organization’s programs are well-run and to raising adequate funds to support them. Yet you have this small nagging feeling in the back of your mind that you may be overlooking some legal requirement or trap for the unwary that will come back to haunt the organization in the future. You feel responsible for the health of your organization, and want to address any shortfall now, before it becomes a crisis later.

Congratulations for your dedication and your proactive concerns! We hope this checklist will assist you on the road to good legal health. But please understand that this checklist is only a starting point. Any checklist has limitations. Please recognize:

This checklist is intended only for publicly supported charities. An organization that is a private foundation, supporting organization, or incorporated as a charitable trust, should not use this checklist.

This checklist is simply a guide; it does not contain and should not be relied upon as legal advice.

Laws and rules change constantly, and this checklist may become out-of-date.

The checklist is not intended to be all-encompassing, but rather to address common concerns of 501(c)(3) public charities incorporated as nonprofit corporations in Washington State. Specific laws or rules may apply to your particular organization or its programs that are not addressed in this checklist.

The checklist is intended to assist you in identifying potential legal problems. If you have identified a potential problem which you are unsure how to resolve, or have questions on matters not covered in this checklist, we recommend that you consult an attorney.

If your organization is unable to afford an attorney, please contact WAACO at contact@waaco.org or 1.866.288.9695, to see if your organization is eligible for pro bono legal services.

1. Our Organization maintains (in secured electronic or hard copy form) a corporate record book with current, legible copies of the following:
a) ________ Certificate of Incorporation from the Secretary of State
b) ________ Articles of Incorporation, with all amendments
c) ________ Current Bylaws
d) ________ 501(c)(3) determination letter from the IRS
e) ________ Application to IRS (Form 1023) for tax-exempt status
f) ________ Annual reports to the Washington Secretary of State
g) ________ Names, addresses, and terms of office of all officers and directors
h) ________ (For a membership organization), list of our current members and their
addresses
i) ________ Insurance policies
j) ________ Contracts or leases
k) ________ Minutes of all meetings of the members, board, and committees of the board
l) ________ IRS Form 990 for the 3 most recent tax years
m)________ List of contributors

2. Our Organization’s registered agent is still at the address on file with the Secretary of State. The registered agent has signed a consent form that is on file with the Secretary of State, and we can rely on our registered agent to give us mail that comes to the corporation. (You can verify the name and address of a nonprofit corporation’s registered agent on the Secretary of State’s website:
http//www.secstate.wa.gov/corps/).

3. Our Articles of Incorporation and Bylaws accurately describe the Organization’s current structure and procedures. Our board of directors reviews the Articles of Incorporation and Bylaws at least once a year to make sure that actual practice is consistent with these documents.

4. Our Organization files an annual report with the Washington Secretary of State.

5. Our Organization prepares and maintains financial statements and statements of account on a regular basis.

6. If our Organization normally receives more than $25,000 in gross receipts each year, it files an annual Form 990 or 990 EZ with the IRS.

7. If our Organization does not normally receive more than $25,000 in annual gross receipts, it files a 990N (e-Postcard). (Available at http:www.irs.gov/charities/). Failure to file this e-Postcard for three consecutive years will result in loss of federal tax exemption.

8. Our Organization has Officer and Director insurance, and the board members have reviewed the policy and understand what it covers and what it does not cover.

9. Our Organization has notified the IRS of any material changes to our exempt purposes or activities, or amendments to our Articles of Incorporation or Bylaws since we applied for 501(c)(3) status.

10. Our Organization has a written conflict of interest policy and follows that policy.

11. Our Organization has considered adopting a written whistleblower policy and if adopted, follows that policy.

12. Our Organization has considered adopting a written document retention policy that ensures that documents are retained and secured for the appropriate period of time, and if adopted, follows that policy.

13. Any transactions our organization undertakes with its insiders, known as “disqualified persons” (such as board members, senior executives, and their close family), including setting our executive director’s salary, is (1) approved by the board or an independent committee, no members of which have a personal or financial interest in the transaction; (2) based on appropriate comparability data; and (3) concurrently documented by the board or committee which states the basis for its approval in writing, e.g., through minutes.

14. Our Organization does not endorse candidates for political office and does not participate in any political campaign for or against a candidate for any public office.

15. Our lobbying activities, if any, are an insubstantial part of our Organization’s overall activities. If we are participating in any lobbying activities, we have considered making, and if appropriate, we have made a 501(h) election with the IRS by filing Form 5768.

16. Our Organization understands its 501(c)(3) determination letter from the IRS, and its status as either a “public charity” or a “private foundation.” If there was an advance ruling period noted on our IRS determination letter that expired before June 9, 2008, we have filed a Form 8734 with the IRS.

17. If our Organization receives funds from regularly-conducted business activities that are unrelated to its exempt purpose, it correctly accounts for those funds, and understands how to report and pay taxes on this unrelated business income.

18. Our Organization understands its obligation to pay any state sales, business and occupation, or property taxes, and understands whether it is entitled to any exemptions from these taxes.

19. Our Organization has a current license to do business from the city/county where it is located.

20. Our Organization has filed a Master Business Application with the State of Washington.

21. Our Organization acknowledges, in writing, gifts of $250 or more.

22. If our Organization provides any goods or services of more than a nominal value to a donor who makes a contribution in excess of $75.00, our Organization provides a disclosure statement to the donor with a good faith estimate of the fair market value of any benefit that the donor received.

23. If our Organization receives gifts of vehicles or other non-cash gifts, it understands and follows the IRS regulations for substantiation of those gifts.

24. If our Organization solicits charitable donations from the general public, it complies with Washington’s Charitable Solicitations Act, including registration and annual reporting requirements. (For more information and to determine, before engaging in solicitation activities, whether your Organization qualifies for an exemption from registering with the Secretary of State, visit the Secretary of State Charities Program website at: http://www.secstate.wa.gov/charities/).

25. Our board has reviewed, and if necessary secured expert advice about, our financial controls, and regularly revisits this topic to assure adequate scope and compliance.

26. Our Organization has adequate separation of financial duties. In particular, the person writing and signing checks is different than the person reviewing and reconciling bank statements.

27. More than one person is an authorized signer on our Organization’s bank accounts, and these signatories are up-to-date.

28. Our Organization does not make loans to any of its officers or directors.

29. Our Organization understands and carefully observes any use or spending restrictions on grants and other contributed funds.

30. Our Organization’s Board of Directors regularly reviews the Organization’s financial statements, and reviews and approves the annual IRS Form 990.

31. Our Organization is confident that it has properly categorized volunteers, independent contractors, employees, and interns, and is treating them appropriately for their category.

32. Our Organization is confident it has properly classified employees as either exempt or nonexempt, and is treating them appropriately for their category.

33. If our Organization’s staff members work overtime or have unusual hours, we are complying with wage and hour standards that govern overtime.

34. Our Organization has considered whether it should adopt written personnel policies that include, for example, a description of employee benefits, a process for handling a harassment complaint or other grievances, termination procedures, the process for performance management or employee reviews and other employment practices.

35. Our Organization verifies that all employees are eligible to work in the United States by having all employees complete form I-9 which the organization retains on file for three years after the date of hire or one year after the date of termination of employment, whichever is later.

36. Our Organization withholds federal income and FICA taxes from employees’ paychecks, deposits these withheld funds, along with the employer’s share or FICA taxes, with the IRS on a regular basis, and files a Form 941 quarterly with the IRS.

37. Our Organization prepares Form W-2 for employees and Form 1099 for any independent contractors.

38. Our Organization has registered with the Washington State Departments of Labor and Industries and Employment Security. Our organization makes quarterly payments to ESD for unemployment insurance, and makes quarterly payments to L & I for workers compensation insurance.

39. Our organization does not discriminate in employment on the basis of race, age, sex, disability, marital status, national origin or creed, or sexual orientation.

40. Our Organization has evaluated whether it wishes to provide workers compensation coverage for volunteers. If it has elected to provide this coverage , it has timely notified the Director of the Department of Labor and industries of its intent to do so and is making the required contributions.

41. If our Organization operates a website, the Organization has posted written terms of use or terms of service that limits the Organization’s liability and disclaims warranties. These terms of service are prominently located on the Organization’s website.

42. Our Organization has proper licenses or permission to use all photos and written information created by other persons or organizations.

43. Our Organization has considered whether it should register or obtain other protection for any of its unique logos, designs, trademarks, or services.

44. We are confident that our Organization’s name does not infringe on the rights of any other organization.

45. Our Organization has considered whether it would be appropriate to license any written materials, photographs, recordings, art, policy manuals, seminar materials, etc, that may be available for use by others.

46. Our Organization has considered implementing a written privacy policy that describes how the Organization uses and discloses personal information. If a privacy policy has been adopted, the Organization periodically confirms that it is in compliance with the commitments it makes in that policy.

47. When contracting with third parties to perform services, our Organization uses an employment or independent contractor agreement that assigns ownership to the Organization of intellectual property created by the employee or contractor within the scope of his or her work for the Organization. For instance, if our Organization has hired a third party to create the Organization’s website, the Organization has obtained ownership of the intellectual property in the website design from the developer.

48. If our Organization allows third parties to post information on the Organization’s website, the Organization has implemented a Digital Millennium Copyright Act compliant notice and takedown provision as part of its terms of use or terms of service. The organization has also registered an agent with the US Copyright Office to receive notices of copyright infringement under the DMCA.

Washington Attorneys Assisting Community Organizations,
“WAACO Nonprofit Legal Self-assessment Checklist,” January 20, 2009

33 principles for good governance and ethical practice.

Legal Compliance and Public Disclosure

1. A charitable organization must comply with all applicable federal laws and regulations, as well as applicable laws and regulations of the states and the local jurisdictions in which it is based or operates. If the organization conducts programs outside the United States, it must also abide by applicable international laws, regulations and conventions that are legally biding on the United States.

2. A charitable organization should have a formally adopted, written code of ethics with which all of its directors or trustees, staff and volunteers are familiar and to which they adhere.

3. A charitable organization should adopt and implement policies and procedures to ensure that all conflicts of interest, or the appearance thereof, within the organization and the board are appropriately managed through disclosure, recusal, or other means.

4. A charitable organization should establish and implement policies and procedures that enable individuals to come forward with information on illegal practices or violations of organizational policies. This “whistleblower” policy should specify that the organization will not retaliate against, and will protect the confidentiality of, individuals who make good-faith reports.

5. A charitable organization should establish and implement policies and procedures to protect and preserve the organization’s important documents and business records.

6. A charitable organization’s board should ensure that the organization has adequate plans to protect its assets—its property, financial and human resources, programmatic content and material, and its integrity and reputation—against damage or loss. The board should review regularly the organization’s need for general liability and directors’ and officers’ liability insurance, as well as take other actions necessary to mitigate risks.

7. A charitable organization should make information about its operations, including its governance, finances, programs and activities, widely available to the public. Charitable organizations also should consider making information available on the methods they use to evaluate the outcomes of their work and sharing the results of those evaluations.

Effective Governance

8. A charitable organization must have a governing body that is responsible for reviewing and approving the organization’s mission and strategic direction, annual budget and key financial transactions, compensation practices and policies, and fiscal and governance policies.

9. The board of a charitable organization should meet regularly enough to conduct its business and fulfill its duties.

10. The board of a charitable organization should establish its own size and structure and review these periodically. The board should have enough members to allow for full deliberation and diversity of thinking on governance and other organizational matters. Except for very small organizations, this generally means that the board should have at least five members.

11. The board of a charitable organization should include members with the diverse background (including, but not limited to, ethnic, racial and gender perspectives), experience, and organizational and financial skills necessary to advance the organization’s mission.

12. A substantial majority of the board of a public charity, usually meaning at least two-thirds of the members, should be independent. Independent members should not: (1) be compensated by the organization as employees or independent contractors; (2) have their compensation determined by individuals who are compensated by the organization; (3) receive, directly or indirectly, material financial benefits from the organization except as a member of the charitable class served by the organization; or (4) be related to anyone described above (as a spouse, sibling, parent or child), or reside with any person so described.

13. The board should hire, oversee, and annually evaluate the performance of the chief executive officer of the organization, and should conduct such an evaluation prior to any change in that officer’s compensation, unless there is a multi-year contract in force or the change consists solely of routine adjustments for inflation or cost of living.

14. The board of a charitable organization that has paid staff should ensure that the positions of chief staff officer, board chair, and board treasurer are held by separate individuals. Organizations without paid staff should ensure that the positions of board chair and treasurer are held by separate individuals.

15. The board should establish an effective, systematic process for educating and communicating with board members to ensure that they are aware of their legal and ethical responsibilities, are knowledgeable about the programs and activities of the organization, and can carry out their oversight functions effectively.

16. Board members should evaluate their performance as a group and as individuals no less frequently than every three years, and should have clear procedures for removing board members who are unable to fulfill their responsibilities.

17. The board should establish clear policies and procedures setting the length of terms and the number of consecutive terms a board member may serve.

18. The board should review organizational and governing instruments no less frequently than every five years.

19. The board should establish and review regularly the organization’s mission and goals and should evaluate, no less frequently than every five years, the organization’s programs, goals and activities to be sure they advance its mission and make prudent use of its resources.

20. Board members are generally expected to serve without compensation, other than
reimbursement for expenses incurred to fulfill their board duties. A charitable organization that provides compensation to its board members should use appropriate comparability data to determine the amount to be paid, document the decision and provide full disclosure to anyone, upon request, of the amount and rationale for the compensation.

Strong Financial Oversight

21. A charitable organization must keep complete, current, and accurate financial records. Its board should receive and review timely reports of the organization’s financial activities and should have a qualified, independent financial expert audit or review these statements annually in a manner appropriate to the organization’s size and scale of operations.

22. The board of a charitable organization must institute policies and procedures to ensure that the organization (and, if applicable, its subsidiaries) manages and invests its funds responsibly, in accordance with all legal requirements. The full board should review and approve the organization’s annual budget and should monitor actual performance against the budget.

23. A charitable organization should not provide loans (or the equivalent, such as loan guarantees, purchasing or transferring ownership of a residence or office, or relieving a debt or lease obligation) to directors, officers, or trustees.

24. A charitable organization should spend a significant percentage of its annual budget on programs that pursue its mission. The budget should also provide sufficient resources for effective administration of the organization, and, if it solicits contributions, for appropriate fundraising activities.

25. A charitable organization should establish clear, written policies for paying or reimbursing expenses incurred by anyone conducting business or traveling on behalf of the organization, including the types of expenses that can be paid for or reimbursed and the documentation required. Such policies should require that travel on behalf of the organization is to be undertaken in a cost-effective manner.

26. A charitable organization should neither pay for nor reimburse travel expenditures for spouses, dependents or others who are accompanying someone conducting business for the organization unless they, too, are conducting such business.

Responsible Fundraising

27. Solicitation materials and other communications addressed to donors and the public must clearly identify the organization and be accurate and truthful.

28. Contributions must be used for purposes consistent with the donor’s intent, whether as described in the relevant solicitation materials or as specifically directed by the donor.

29. A charitable organization must provide donors with specific acknowledgments of charitable contributions, in accordance with IRS requirements, as well as information to facilitate the donors’ compliance with tax law requirements.

30. A charitable organization should adopt clear policies, based on its specific exempt purpose, to determine whether accepting a gift would compromise its ethics, financial circumstances, program focus or other interests.

31. A charitable organization should provide appropriate training and supervision of the people soliciting funds on its behalf to ensure that they understand their responsibilities and applicable federal, state and local laws, and do not employ techniques that are coercive, intimidating, or intended to harass potential donors.

32. A charitable organization should not compensate internal or external fundraisers based on a commission or a percentage of the amount raised.

33. A charitable organization should respect the privacy of individual donors and, except where disclosure is required by law, should not sell or otherwise make available the names and contact information of its donors without providing them an opportunity at least once a year to opt out of the use of their names.

Panel on the Nonprofit Sector Convened by Independent Sector, “Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations,” October 2007

The seven deadly sins of nonprofit strategy.

Nonprofit organizations frequently fall into different, predictable traps when they go about creating strategy – what can be called the seven deadly sins of nonprofit strategy. The strategy development process is designed to produce a breakthrough strategy that, if effectively implemented, will make a significant difference in an organization’s mission impact. However, if you begin to see yourself or your organization starting to fall into any of these traps, then it might be time to confront these “sins” and get your organization back on the right path – toward developing a breakthrough strategy.

1. “It’s just sitting on the shelf.” The rest of the sins are not necessarily in order of severity, but never implementing a strategy is clearly No. 1 because it is so pervasive and represents a huge waste of money and time – from staff and volunteers. This sin can be deadly, indeed, when board members realize the hours they have wasted, making strategic plans that are never implemented. And for the attorneys on your board, those are billable hours.
2. Insular mountaintop planning. It can be good for a strategy-planning group to go to the “mountains” to get away from distractions and work together. However, before you go, gather comments from stakeholders on the organization’s future and check with them when you get back for their reactions before you publish and laminate the plan. (Author and consultant Peter Block calls this error “leadership by lamination.”)
3. Overemphasis on fundraising. “What?! Impossible!” I can just hear my fundraising colleagues’ reaction. Of course, you frequently find new fundraising initiatives as a part of a new strategy. The problem is that as these efforts are highlighted, other important aspects of a strategy are under emphasized, such as program innovation, leadership succession, strategic partnerships and more.
4. Too rushed. Rather than rushing (for example, “We are doing our strategic plan at an all-day retreat two weeks from Friday. Are you available?”), it is wiser to take the time to thoughtfully design and implement a strategy-development process. Of course, it should not take forever, either. Taking the time can lead to inspiring visions, innovative strategies and empowered stakeholders – all of which produce higher performance.
5. Lots of plans, but no strategy. Strategic-planning documents can contain volumes of plans, activities and environmental analysis, but many don’t include a real “strategy.” A true strategy articulates the dynamic levers that will catapult an organization toward its desired future, as well as how its key operational areas will interact to create a cycle of higher performance.
6. No annual review. No one can see into the future when developing a strategic plan! Consequently, you make certain measured assumptions about the future, including changes in your internal and external environments. An annual review of assumptions and results is important to keep the plan relevant. You may not change your mission or vision, but you may need to change plans and activities.
7. Not ambitious enough. A strategy and its associated goals and plans should be focused on a vision that is big, bold and inspiring. Many strategic plans are based simply on an analytic forecast of the way things are currently headed. How dull. It was Goethe who said, “Dream no small dreams, for they have no power to move the hearts of men.”

“The Seven Deadly Sins of Nonprofit Strategy”, Advancing Philanthropy, November/December 2010